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Note: This document is from the archive of the Africa Policy E-Journal, published by the Africa Policy Information Center (APIC) from 1995 to 2001 and by Africa Action from 2001 to 2003. APIC was merged into Africa Action in 2001. Please note that many outdated links in this archived document may not work.

Southern Africa: Apartheid-Caused Debt

Southern Africa: Apartheid-Caused Debt
Date distributed (ymd): 990315
Document reposted by APIC

+++++++++++++++++++++Document Profile+++++++++++++++++++++

Region: Southern Africa
Issue Areas: +political/rights+ +economy/development+ +security/peace+
Summary Contents:
This posting contains a press release and the statement by Archbishop of Cape Town, the Most Revd Njongonkulu Ndungane, on the Occasion Of the Launch of the Report "Apartheid-caused Debt." It also contains excerpts from a summary of the report. The full summary is available on-line at the web site of the South Africa Jubilee 2000 campaign: The full 100-page report is expected to be available soon on the same site.

+++++++++++++++++end profile++++++++++++++++++++++++++++++

Media Conference, 11h00, 2nd March 1999, Bishopscourt

Apartheid-Caused Debt: The Role of Swiss & German Finance


The Apartheid regime used foreign credits as an opportunity to postpone negotiations and to intensify its repression and war. Those who supported the regime by providing foreign finance are to be considered accomplices.

Apartheid's financial engineers managed, even in the most politically turbulent years, to raise hundreds of millions of Dollars for the Apartheid regime which was facing financial and political bankruptcy. They also managed to engineer their illegitimate dealings in such a way so as to shift the economic consequences to the post-Apartheid state. The democratic government's scope in financial policy has thus been greatly limited.

Some Apartheid foreign debts are not listed in the official statistics, including:

  • Heavy Rand-hedging losses of the SA Reserve Bank. Losses incurred by the financial crisis of the Apartheid regime and by sanctions-evading businesses have been nationalised and shifted to the national budget of the new South Africa. It is estimated that these losses imposed on South African taxpayers amounted to 10% of the total central government debt at the end of 1993. There is therefore an internal government debt caused by foreign debts.
  • Short-term gold-swaps and long-term gold loans, used by the Apartheid regime to secure credits especially from 1985 to 1989. It seems that these gold loans were never registered by the SA Reserve Bank as foreign debts, but more investigation is required. It remains to be investigated whether South Africa continued to export gold after 1994 in order to repay Apartheid gold loans, and how significant these exports were.

The foreign debt of the Apartheid regime (in its narrow sense) amounts to R50bn for 1993 (excluding the liabilities of the SARB, trade credits, and direct and non-direct foreign investments in the private sector). The Apartheid regime's foreign debt more or less equals the initial investment provided for in the Reconstruction & Development Programme. Total Apartheid foreign debt (including public authorities and public corporations; excluding shares) amounted to R86.7bn in 1993.

From 1985 to 1993, interest and dividends worth an annual average of US$3.1bn were transferred abroad. In order to pay individual compensation to the victims of severe human rights violations, US$0.5bn is needed. If foreign investors renounced one sixth of those annual transfers, this would suffice to pay compensation.

South African companies with foreign investments transferred significantly more profits back to South Africa during the period 1985 to 1990, the most repressive period under Apartheid, and massively reduced repatriation of foreign profits after the 1994 democratic transition. Is this Apartheid Patriotism?

The economic costs to South Africa's neighbouring states for conflicts relating to the abolition of Apartheid from 1980 to 1993 are estimated at US$115bn.

90% of the long-term Apartheid foreign debt in 1993 is owed to four creditor countries of the Apartheid regime: the United States, Germany, Switzerland, and the United Kingdom.

30 Major banks and 230 small creditor banks accepted a proposal in 1986 to reschedule the foreign debt of the Apartheid regime. A Technical Committee was formed, presumably representing Apartheid's major creditor banks including:

  • 3 German banks: Deutsche, Dresdner, Commerzbank.
  • 3 Swiss banks: Credit Suisse, Union Bank of Switzerland, Swiss Bank Corporation.
  • 3 UK banks: Barclays, NatWest, Standard Chartered.
  • 3 USA banks: Citibank, Manufacturers Hanover, Morgan Guaranty.
  • 2 French banks were later added: Banque Indo-Suez, Credit Lyonnais.

German capital was the most important financier of the Apartheid's public sector, taken at 1993, with claims against South Africa amounting to DM7.4bn. Gains made by their odious business amount to an estimated DM8.4bn for the period 1971 to 1993 (excluding trade).

The Swiss financial centre was the second most important financier of Apartheid's public authorities. Swiss business relations with South Africa became increasingly important towards the end days of Apartheid, but the investment zeal of the Swiss business centre has been reduced to the level of the 1970s since the democratic transition in South Africa. Switzerland's importance to the Apartheid state climaxed in 1989, the same time as the climax of the anti-Apartheid sanctions movement.

The Swiss parliament, as a result of pressure from the International Campaign for Cancellation of the Apartheid Debt, will tomorrow discuss whether to set up a "Truth Commission" to further investigate Swiss banks' support for the Apartheid regime.

The right to debt cancellation and fair procedures for debt cancellation should be regulated internationally and no longer left to arbitrary acts of individual settlements. This applies to insolvency procedures for countries, the cancellation of odious debts, and post-conflict countries. If there is ever to be any hope of a successful international sanctions campaign again, those financial institutions who profited from supporting Apartheid repression can not continue to be rewarded now for their odious profiteering.

Representing the International Campaign for the Cancellation of Apartheid Debt:
Ms Mascha Madoerin, Co-author of the report, Switzerland

Representing Jubilee 2000 South Africa: Archbishop Njongonkulu Ndungane, Patron of Jubilee 2000 Rev Dr Molefe Tsele, Chairperson of Jubilee 2000 SA Mr George Dor, Jubilee 2000 SA Publicity Officer Br Neville Gabriel, National Secretary of Jubilee 2000 SA

The report looks at how foreign financing of the Apartheid regime, particularly by German and Swiss financiers, affected political developments in South Africa, especially during the critical 1980s. It deals with questions about the legitimacy of the Apartheid foreign debt, and how the effects of Apartheid-caused debt continues to seriously restrict South Africa's economic sustainability in its efforts to meet urgent social backlogs. The risks involved to South Africa's foreign capital market arising from the campaign for debt cancellation is addressed briefly. A strong call is made for compensatory payments from those who profited from Apartheid repression.

For more information contact:

George Dor, Jubilee 2000 SA Publicity Officer. Tel. 011 648 7000, E-mail:


Aktion Finanzplatz Schweiz - Independent Network Monitoring the Swiss Financial System, Drahtzugstr. 28, 4057 Basel, Switzerland Tel: ++41 61 693 17 00 Fax: ++41 61 693 22 32 E-mail:

Statement by the Archbishop of Cape Town, the Most Revd Njongonkulu Ndungane on the Occasion Of the Launch of the Report "Apartheid-caused Debt"
at Bishopscourt, Tuesday March 2 1999

It is my greatest pleasure to welcome you to Bishopscourt on behalf of Jubilee 2000 South Africa, on the occasion of the Launch of this Report: "Apartheid-Caused Debt : The Role of German and Swiss Finance". We are extremely grateful to the researchers and especially to Mascha Madorin who is here with us and will no doubt share her findings that are contained in the report.

The Report is mainly about German and Swiss Banks who supported the Apartheid Regime so vigorously during the darkest days of our history in South Africa during the 1980s. The report further says that the Apartheid Regime used foreign credits as an opportunity to postpone negotiations and to intensify its repression and war. Those who supported the regime by providing foreign finance are to be considered accomplices. The author of the Report is alarmed by the ability of the financial engineers of Apartheid who even in the most critical years managed to raise hundreds of millions of dollars for the Apartheid Regime which was then facing financial and political bankruptcy; and to shift the consequences thereof to the New Democratic Government thereby creating enormous difficulties in its attempts to redress the imbalances of the past.

There are some very revealing facts in the summary on Table 1, the Foreign Debt of the Apartheid Regime which Mascha describes as super-odious, and I am sure she will refer to that in her presentation.

Our main objective is to target international financial institutions which colluded under Apartheid which was declared a crime against humanity. We want these companies to make reparations through a massive capital injection plan (some form of Marshall Plan) that will go towards education and job creation.

To this end we are calling on the German and Swiss Churches, the NGO's and all morally righteous and just people to support our campaign for reparations from those financial institutions that colluded with Apartheid as we face the challenge of nation-building in a post- Apartheid era. I am delighted to learn that the Swiss Parliament, as a result of pressure from the International campaign for Cancellation of the Apartheid Debt, will tomorrow discuss whether to set up a "Truth Commission" to further investigate Swiss Banks' support for the Apartheid Regime.

We sincerely hope that the Germans will follow suit.

End Statement

The role of Swiss and German Finance

by Mascha Madoerin and Gottfried Wellmer with a contribution by Martina Egli

Summary of the Research Document (excerpts)

This 100 page report was commissioned by the German and Swiss Campaign Coalitions linked to the newly launched international Campaign for Debt Cancellation and Reparations in Southern Africa, and is published in English by Jubilee 2000 South Africa. The paper is meant as one of several contributions that have been published in the course of the last 18 months on the issue of South Africa's foreign debts and the costs which the Apartheid regime caused the neighboring states in Southern Africa.

The research interest of the paper focuses on two fields:

Firstly, the authors intended to deal once more with the question of how the issue of foreign financing of the Apartheid regime affected the political development in South Africa in the 80s. Two issues are in the forefront: The legitimacy of foreign debt. The question of the long-term effects of Apartheid-caused debt on the young democracy and its economic sustainability. The controversial question of the risks to South Africa's capital market arising from the campaign for debt cancellation is also briefly discussed.

Secondly, the authors examine the role played by German and Swiss financiers within the framework of foreign financing of the Apartheid regime during the politically critical years.

A separate part of the paper deals with the issue of reparations and demands compensatory payments from those who profited from Apartheid. ...

After 1973 it became obvious that the colonial wars in South Africa's neighbouring countries (Angola, Mozambique, Zimbabwe and Namibia), which represented an actual cordon sanitaire for the Apartheid regime, could not be won by the colonial powers. The independence of Mozambique and Angola was imminent. Large-scale workers strikes and the Soweto uprising of 1976 reflected the beginning of a new phase in South Africa's political history. In this situation, the Apartheid regime decided to embark on its "Total Strategy", which contained comprehensive military, economic and home components serving the single objective of safeguarding the regime. In the implementation of this programme, the government, the administration and public corporations played a decisive role. The incredible waste of resources - seen from today's perspective - put at the disposal of the regime thanks to soaring gold prices and thanks to increasing foreign financing until the mid 80s, served basically to put into practice the survival strategy which left behind devastating results.

Already at the beginning of the 80s, mainly US companies began to sell their businesses in South Africa. Towards the end of 1982, after the major western countries had once more opted to grant credits to South Africa, the IMF was forbidden to grant loans to South Africa if the institution failed to prove that these resources were not used to perpetuate Apartheid. This proof could not be delivered. On the other hand, foreign banks, the most eager among them major banks from Germany and Switzerland, organised long term loans worth several billions of dollars for the Apartheid state. More comprehensive financial sanctions were only imposed in 1985. Their effect was, however, significantly reduced by several debt rescheduling operations and by the striking loyalty of German and Swiss bankers.

As is convincingly shown in Part I and in the attached chronology, the decisive issue of the period from 1985 to 1990 was the intensification of Apartheid South Africa's war against its neighbouring countries and against the South African population. The transitional period from 1990 to 1993 was also characterised by a severe policy of internal destabilisation and by the escalation of violence. Only well into 1993 was the Apartheid regime prepared to comply with one of the central conditions for the lifting of sanctions: the holding of democratic elections according to the principle one-person-one-vote.

The authors are convinced that sanctions and in particular the financial crisis of the Apartheid regime in relation to foreign creditors, played an essential role in getting the regime to the negotiation table. Towards the end of 1989, South Africa was faced with a serious financial crisis in foreign relations. On the other hand, the Apartheid regime used foreign credits as an opportunity to postpone negotiations and to intensify its repression and war. Should the young democratic state now be burdened with the repayment of Apartheid-caused debts at the expense of urgent social expenditure? The many organisations who have joined the campaign clearly say NO.

Those who stuck to the regime by providing foreign finance are to be considered accomplices. The paper therefore suggests that either 1989 or 1993 be taken as the cut-off year for the demands for debt cancellation and that profit transfers from 1985 to 1993 be considered as a reference for reparation demands. ...

The most important financiers of the Apartheid state

Looking at long term debts, 90% are owed to four creditor countries of the Apartheid regimes: the United States, Germany, Switzerland and the United Kingdom. Up to 1992, the US mainly held assets with public corporations and compared to Switzerland and Germany much less assets with public authorities. ...

Furthermore, the research confirms that German companies and banks were contributing significantly with direct and non direct investments to maintain the Apartheid regime in power and to prolong the suffering of the oppressed people. According to estimates made by the author, the gains made with their odious businesses amounted to 8.4 billion DM for the period 1971-93 (not considering trade). This is dirty money, for which compensation should be paid. Well-informed experts on the South African economy and administration have again and again asserted that during the critical phase of the late 1980s, the German and Swiss banks remained utterly loyal to the Apartheid regime - with high risk increases on the interest paid, though!

This material is being reposted for wider distribution by the Africa Policy Information Center (APIC). APIC's primary objective is to widen the policy debate in the United States around African issues and the U.S. role in Africa, by concentrating on providing accessible policy-relevant information and analysis usable by a wide range of groups and individuals.

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